Required Prepare an extended trial balance, a Statement of Financial Position, and a Statement of Comprehensive Income for Miss Prism for the year ended 31st August 2016 (using a Common European Format).
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
![Tutorial Question 2
Miss Prism
Miss Prism set up a private kindergarten on 1st September 2015. The capital invested has been spent
on purchasing a set of desks and classroom furniture costing €5,840 and food inventory at €470, with
a remaining €500 left in the school bank account.
At 31st August 2016, Miss Prism's account books have these balances (besides her initial capital as
indicated above).
Cash on hand
Food inventory - opening balance
purchases
(5)
(6)
Desks and furniture
Purchase of gym equipment (on 1st January 2016)
Fees tuition fees (cash received)
lunch fees (cash received)
€
210
470
Teachers' salaries paid
Rent paid
Electricity bill paid
Bank overdraft (balance as at 31st Aug 2016)
At the end of the year, Miss Prism informs you about the following:
(1)
Some €760 of the tuition fees remained to be paid.
(2)
Some €380 of teachers' salaries remained to be paid.
(3)
Closing stock of food inventory is €730.
(4)
Depreciation on desks and furniture of €740 and gym equipment of €480 have not been
charged.
One month's rent amounting to €150 has been paid too soon.
The electricity bill relating to the financial year which remains unpaid is estimated to be €220.
Required
3,780
5,840
3,750
15,260
3,690
9,280
1,950
800
320
Prepare an extended trial balance, a Statement of Financial Position, and a Statement of
Comprehensive Income for Miss Prism for the year ended 31st August 2016 (using a Common
European Format).](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F73b5e1e2-bc53-412b-a0f7-aa6fdacacea6%2F71ab67b7-646c-403e-aa26-f9b2217bf1b4%2Fzh4vloe_processed.png&w=3840&q=75)
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